The official blog of Illinois Issues magazine,
published by the Center for State Policy and Leadership
at the University of Illinois Springfield

Wednesday, January 30, 2008

Feds recast FutureGen's future

FutureGen isn’t dead, yet. But it’s dead as we know it. The 13 energy companies that formed the FutureGen Alliance and selected Mattoon as the host of the groundbreaking project also isn’t dead, yet. In fact, Mattoon and the Alliance could land another version of the multibillion-dollar project with state-of-the art technology for cleaner energy production if they go through another long, detailed, competitive bidding process. And the Alliance would have to come up with a way to fund it other than borrowing, as it proposed in the original FutureGen deal with the federal government.

The U.S. Department of Energy announced in a conference call Wednesday that a new approach to FutureGen would be an “all around better deal for America” for less money and less risk. Energy Secretary Samuel Bodman said the department would start from scratch, seeking new bids for new projects that would a) allow for commercial operation of clean coal plants, b) use multiple locations and c) sequester “double the amount” of carbon dioxide emissions than proposed in 2003. (That’s when President George W. Bush unveiled the original FutureGen plan.) The restructured FutureGen also would aim to generate enough electricity to power 400,000 homes, more than the FutureGen projection, and faster.

New plants would be operational by 2015. Interested applicants have until March 3 to submit proposals.

The halt on federal funding for the original FutureGen site started to trickle down when the FutureGen Alliance announced Mattoon as the selected site in December. In fact, the Energy Department urged the Alliance not to continue with the announcement because of funding and feasibility concerns and didn’t attend the unveiling in Washington, D.C.

The concerns, according to DOE’s Deputy Secretary Clay Sell, focus on the cost estimates nearly doubling to $1.8 billion and drastic changes in clean-coal technology in the past five years. He said more than 33 companies are seeking permits to build plants that use similar technology that could do what made FutureGen so promising: generate electricity and hydrogen from coal and then sequester the carbon dioxide emissions underground rather than releasing them as air pollutants. The costs and the market changes underpinned the decision to take a different approach, Sell said.

It really didn’t help that the FutureGen Alliance proposed that its share of the costs would be financed by mortgage loans. “Quite simply, the financing approach advanced by the FutureGen Alliance would place interests of U.S. taxpayers at risk to that of private mortgage holders,” Sell said. “This would represent a substantial departure from DOE practice for projects which the government bears a majority of costs. And we think it would significantly and unduly increase taxpayer risk.” Ultimately, the feds and the Alliance couldn’t agree on a way to restructure FutureGen.

But what if costs escalate just as they did for the original project? “I can’t guarantee anything five years in the future, and neither can anyone in the Congress,” Sell said. Responding to the Illinois delegation’s harsh words that the feds put the kibosh on Mattoon’s version of the FutureGen, Sell added that the administration has much more confidence that the new approach wouldn’t suffer the same fate.

He also quashed skepticism that the administration pulled the plug on the Mattoon site as retribution for the project not landing in the president’s home state of Texas, as well as the notion that the DOE conveniently set a timeline that coincides with the end of Bush’s term. “Had I wanted to just wash my hands of this, I would have let it go. And the folks of Mattoon, Ill., could have continued to celebrate this for a year or maybe two years. And then when the thing went south, I could have blamed it on the next administration for failing to bring this great idea to fruition. But we recognized that we had a problem. We recognized that we needed to restructure it.”

So now the feds have to deal with the persistent Illinois Congressional delegation, as well as the state legislature and the governor, who all vow to fight for Mattoon and FutureGen.

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The bureau follows state government from the Capitol Press Room and writes articles for Illinois Issues magazine, published by the Center for State Policy and Leadership at the University of Illinois at Springfield.
Contact: illinois.issues@gmail.com